The one shut in LNG train at NWS has a capacity of 2.5 MT. That...

The one shut in LNG train at NWS has a capacity of 2.5 MT.

That requires 360 mmcfd for 20 years to justify backfill supply.

That means you need 2.6 TCF 2P + 2C to justify.

The economic model is simple> margin = JKM - [gas supply cost + pipeline tariff + tolling cost+ shipping (eg to Japan)]

JKM is currently A$ 24 so there is plenty of headroom

The economics probably only make sense if you are the plant operator

For example your tolling cost would be very low (just opex) as plant is a sunk cost / lets call it A$2.00 / mmbtu

Pipeline would be expensive but would amortized over a large reserve base so unit cost would be low - lets say net of liquids revenue A$1/ mmbtu

Supply cost as operator would be very low - why? because revenue from NGL would more than cover production opex and possibly even pipeline tariff
SO gas supply operating cost close to or = zero

The LNG operator would have to buy the asset - lets say they pay A$1 / mmbtu and also A$1 / mmbtu drill and tie in

SO then spot operator margin is = $24 - [$2 (supply cost)+$1 (net pipe tariff) + $2 (tolling cost) = $1 shipping cost ]= $18 / mmbtu

Annual CF for this operation would be over $2bn pa with very little capex so you can imagine the NPV/ IRR

But it really only works if you have
a) confirmed the resource and
b) you also own the LNG plant and the gas.

So probably not a preferred option now but as the 2P+2C grows to threshold size the NWS backfill option will become competitive